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ICE North America Digital: Day 2 round-up

13 May 2020

The second day of ICE North America Digital focused on sports betting, looking both at the regulatory prospects in the wake of Covid-19’s disruption, as well as examining the new products growing in popularity during the shutdown.

Morgan explained that the pandemic had subtly shifted the role of the regulator.

The Board has already set out rough guidelines, which will limit casinos to 50% occupancy and require license holders to set out plans for social distancing on the gaming floor. It is also having to develop new guidelines and rules covering property sanitation – something that is not traditionally part of a gaming authority’s remit, she pointed out.

Acknowledging the significant financial hit taken by the industry after the six week shut-down, Morgan said operators would be able to file and pay tax for just one of each form of gaming offered in their properties. This in practice would mean they would be taxed on having a single table game, or one slot machine. They will also be able to amend their tax forms based on how many devices or tables they will be able to offer when activity resumes.

Turning to the evolution of gaming during the pandemic, Pollock quizzed Morgan on esports. She explained that a study on whether esports wagering should be allowed concluded that it should be classed as separate from traditional sports, as well as setting out specific criteria for betting on individual events, based on operator demand.

This, Morgan said, was in part due to integrity concerns. Match-fixing is more prevalent in esports, due to the lack of a major governing body and low salaries for competitors, she noted. The lack of such a governing body to enforce rules and penalties was an ongoing issue – though even when this sort of entity is in place, it’s no guarantee that issues will not arise, she added.

Pollock then spoke to Michigan Representative Brandt Iden, and Christopher Hebert, Gaming Division Director of the Louisiana Attorney General’s Office. Iden revealed that the crisis has spurred efforts to fast-track the implementation of mobile betting and igaming rules, which could see the state go live as soon as August or September this year.

Hebert (pictured right), meanwhile, pointed out that Louisiana, with its legislature in a non-fiscal session, would only be able to hold parish elections on whether to allow betting. Should one of a selection of bills to facilitate this pass, it would trigger efforts to develop an operational and tax framework.

What this may look like, Hebert said was difficult to say. However, he said the impact of Covid-19 on Louisiana’s gaming industry – the state’s biggest income producer – could prompt some lawmakers previously opposed to gaming expansion to reconsider their position.

Emerging products
Discussion then turned to esports and virtuals, with Nascar’s managing director for gaming Scott Warfield and Inspired Entertainment chief commercial officer talking about two products that are enjoying increased prominence in the Covid-19 era.

Warfield said the eNascar Pro Invitational esports racing league, created in collaboration with long-term partner iRacing, which sees real drivers race on virtual tracks (pictured below), has been popular among both Nascar fans and those new to the sport.

“We’re averaging over a million viewers, we’re trending on twitter every weekend, there’s daily fantasy and real money betting. It’s truly been a light in a dark time,” Warfield said.

“We’re bringing in the esports fanatic rather than just Nascar fans.”

The association created a free-to-play social game in partnership with Penn National Gaming and a daily fantasy game in partnership with DraftKings – both based on games in the real Nascar season – for further engagement.

Rogers, meanwhile, said Inspired’s Virtual Grand National and Virtual Kentucky Derby filled a gap for those missing real racing because of lockdown.

“The virtual grand national filled a gap in the schedule at the exact time of the real Grand National,” Rogers said. “It gave the UK audience some light entertainment and some light relief and was a chance to predict the events of the real grand national if it had taken place.”

When real sports return, Rogers said virtuals may decline in popularity, but he believes that many new fans will stick around.

“Live sports are always what people will gravitate towards because they have an association with a team or a city or a player,” he said. “But the increase in the players who would have experienced it for the first time and hopefully had a good experience should create a tail that will remain.”

Appetite for disruption
The disruption of 2020, and its impact on sports betting’s regulatory momentum was then considered by Genius Sports’ Bill Anderson, PointsBet’s Seth Young and Hard Rock’s Kresimir Spajic (pictured below right), moderated by Dr Laila Mintas.

Anderson said the situation had forced the sports data specialist to look at different sporting competitions, especially non-traditional sports, in order to provide clients with a flow of live events.

Anderson pointed out that state sports betting catalogs had grown exponentially as a result of regulators being quick to approve betting on new leagues, prompted by the need to support their licensees, and ensure they continue to generate tax revenue.

These sports will not be able to replace the major US leagues, but they can at least ensure a flow of betting markets during the shut-down. This, in turn, shows the importance of mobile going forward, the panel concluded.

“Opponents of online gambling have become proponents,” Young said, predicting a busy second half of the year, continuing into 2021, as states work to pass enabling legislation for the channel.

Spajic added that the plummeting revenue resulting from the pandemic would be mitigated in part by a surge of interest in sports upon their return. This would not only drive increased viewership, but also spike interest in sports betting.

Anderson also pointed out that the slow down could be seen as a gift for operators to fine-tune their products, allowing them to return to capacity with an improved and enhanced solution capable of capturing market share.

Looking ahead to the coming 12 months, the panel was broadly optimistic that at least one or two of the larger states – such as Florida, California or New York – regulating mobile betting. Spajic said that with states likely to see income decline by up to 20%, many may hold special sessions to revise their 2020 budgets, and come upon gambling expansion as a way to plug holes.

He also pointed out that the return of live sport – almost certainly behind closed doors – was a more immediate challenge for the industry to address. The return of the German Bundesliga, from 16 May, would be a good test to see how this new normal could work.

With players going from competing in front of tens of thousands of spectators to empty stadiums he warned that this will require some innovation from traders, who would have to model for unprecedented conditions.

Engagement and the pandemic
The day concluded with a discussion between Catena Media’s Michael Daly and Chalkline Sports’ Daniel Kustelski, over the opportunities created by the crisis for performance marketing businesses.

Kustelski pointed out that while most sports have stopped, there were still enough events to keep up high levels of engagement at Chalkline.

“There was a lot of enthusiasm ahead of March madness and then the NBA Finals, NHL finals and NFL season, then everything changed, “ he said. “But there’s still been activity. Not just Belarussian soccer or Russian ping pong, but also horse racing and the NFL and NBA drafts.”

Daly said that while much had changed for Catena media, much has also stayed the same.

“Everything’s changed but also it hasn’t,” he explained. “We’re still doing a lot of search, we’re still doing a lot on the big sports like the NFL. A few operators dropped out but most have been able to shit to casino and poker.”

The pair said that much of the value affiliates can provide is also in customers who can be cross-sold, and that this is especially important with less live sports.

“Cross-sell is something an operator can do and should do,” Daly said. “From an affiliate perspective, we need to be able to build in the possibility of cross-selling into a deal.

“They can say, ‘You’re overcharging for sports CPA’ but maybe they’re not accounting for the value we’re bringing in in casino CPA”

Moving the discussion to new markets in the US such as Colorado or Michigan, Kustelski said it was still a good time for new licensees to launch despite the lack of live sports.

“Putting my operator hat on, I’m launching as soon as possible,” he said. “I know things could all start again very quickly and I want to have my systems in place and know everything is working as well as possible for when there might be an NBA playoff or NHL playoff.”

Read iGB North America’s round-up of Day 1 of ICE North America Digital here.

If you’d like to explore these topics and more with your peers and a host of leading expert speakers, join us for ICE North America Digital today until this Friday, May 15. Find out more and register free here